ANEN Anaren, Inc. (MM)

SYRACUSE, N.Y., Oct. 26 /PRNewswire-FirstCall/ -- Anaren, Inc. (NASDAQ:ANEN) today reported record net sales for the first quarter ended September 30, 2006 of $30.2 million, up 23% from the first quarter of fiscal year 2006. (Logo: http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO ) Net income for the first quarter of fiscal 2007 was $4.0 million, or $0.22 per diluted share, up 76% from the first quarter of last year. Net income for the quarter included $830,000, or $0.04 per diluted share in equity based compensation expense. Excluding stock based compensation expense, net income for the first quarter was $4.6 million, or $0.26 per diluted share. The effective tax rate for the first quarter of fiscal 2007 was 27.8%, compared to 23.4% for the first quarter of fiscal 2006. Operating income for the first quarter of fiscal 2007 was $4.6 million, or 15.2% of net sales, up 95% from the first quarter of last year. Operating income for the quarter included $830,000 in stock based compensation expense. Excluding stock based compensation expense, operating income for the first quarter of fiscal 2007 was $5.4 million, or 18.0% of net sales. Lawrence A. Sala, Anaren's President and CEO said, "The strong growth in net sales was the result of record first quarter net sales for both the Wireless and Space & Defense groups. The growth in net sales, an increase in product yields, and a favorable product mix drove improved profitability for the quarter." Mr. Sala added, "We are pleased with the number of new Wireless and Space & Defense market opportunities and the progress of our new product development efforts." Balance Sheet Cash, cash equivalents and marketable debt securities at September 30, 2006 were $86.8 million. During the quarter, the Company utilized $1.0 million in cash from operations as a result of a $3.7 million increase in accounts receivable and a $3.3 million increase in inventory. Expenditures for capital additions in the first quarter were $2.3 million. Wireless Group Wireless Group net sales for the quarter were a record $19.8 million, up 21% from the first quarter of fiscal 2006. The increase in net sales from the first quarter of last year was driven by increased demand across all wireless product lines. Seasonally strong sales of consumer component products were $2.0 million for the quarter, up 54% from the first quarter of last year. Infrastructure product demand was positively impacted by continued GSM network build out in India. During the quarter, the group introduced several new high power Xinger products for cellular and WiMax infrastructure applications and confirmed a design win on a consumer component related wireless local area network (WLAN) application. In general, overall wireless infrastructure demand remains volatile and progress continues on the ramp up of production of new custom wireless assembly programs. Research and development investment remains focused on broadening the consumer component product line and development of ferrite based custom assembly products for leading wireless infrastructure equipment manufacturers. Customers that were 10% of Wireless Group net sales or greater for the quarter included Ericsson, Inc., Motorola, Inc., Nokia Corp. and Richardson Electronics Ltd. Space & Defense Group Space & Defense Group net sales for the quarter were $10.4 million, up 26% from the first quarter of fiscal 2006. New orders for the quarter totaled $13.9 million and included contracts for ground based and airborne jamming components and subsystems. Research and development investment is focused on increasing the integration and functionality of radar and receiver related products. Space & Defense backlog at September 30, 2006 was $51.4 million. Outlook For the second quarter, we expect a decline in market demand for wireless infrastructure products, a seasonally driven decrease in demand for the consumer component product line and increased demand for the Space & Defense segment as a result of recent new contract wins. As a result, we expect net sales to be in the range of $29.0 - $32.0 million for the second quarter of fiscal 2007. With an anticipated tax rate of approximately 25% and an expected stock based compensation expense of approximately $0.04 per diluted share, we expect net earnings per diluted share to be in the range of $0.20 - $0.23 for the second quarter. Forward-Looking Statements The statements contained in this news release which are not historical information are "forward-looking statements". These, and other forward- looking statements, are subject to business and economic risks and uncertainties that could cause actual results to differ materially from those discussed. The risks and uncertainties described below are not the only risks and uncertainties facing our Company. Additional risks and uncertainties not presently known to us or that are currently deemed immaterial may also impair our business operations. If any of the following risks actually occur, our business could be adversely affected, and the trading price of our common stock could decline, and you may lose all or part of your investment. Such known factors include, but are not limited to: the Company's ability to timely ramp up to meet some of our customers' increased demands; unanticipated delays and/or difficulties associated with relocating the Company's Suzhou China facility and successfully completing all requalification procedures; potential unanticipated liabilities and delays associated with the physical expansion of the Company's Syracuse, New York facility; unanticipated delays in successfully completing customer orders within contractually required timeframes; increased pricing pressure from our customers; decreased capital expenditures by wireless service providers; the possibility that the Company may be unable to successfully execute its business strategies or achieve its operating objectives, generate revenue growth or achieve profitability expectations; successfully securing new design wins from our OEM customers, reliance on a limited number of key component suppliers, unpredictable difficulties or delays in the development of new products; order cancellations or extended postponements; the risks associated with any technological shifts away from the Company's technologies and core competencies; unanticipated impairments of assets including investment values and goodwill; diversion of defense spending away from the Company's products and or technologies due to on-going military operations; and litigation involving antitrust, intellectual property, environmental, product warranty, product liability, and other issues. You are encouraged to review Anaren's 2006 Annual Report, Anaren's Form 10-K for the fiscal year ended June 30, 2006 and Anaren's Form 10-Q for the three months ended September 30, 2006 and exhibits to those Reports filed with the Securities and Exchange Commission to learn more about the various risks and uncertainties facing Anaren's business and their potential impact on Anaren's revenue, earnings and stock price. Unless required by law, Anaren disclaims any obligation to update or revise any forward-looking statement. Conference Call Anaren will host a live teleconference, open to the public, on the Anaren Investor Info, Live Webcast Web Site (http://www.anaren.com/) and ccbn.com at http://www.streetevents.com/ on Thursday, October 26, 2006 at 5:00 p.m. EDT. A replay of the conference call will be available at 8:00 p.m. (EDT) beginning October 26, 2006 through midnight October 30, 2006. To listen to the replay, interested parties may dial in the U.S. at 1-888-203-1112 and international at 1-719-457-0820. The access code is 4251221. If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-800-500-0177 and International is 1-719-457-2679. Company Background Anaren designs, manufactures and sells complex microwave signal distribution networks and components for the wireless communications, satellite communications and defense electronics markets. For more information on Anaren's products, visit our Web site at http://www.anaren.com/. Anaren, Inc. Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Sept. 30, 2006 Sept. 30, 2005 Sales $30,203,110 $24,614,358 Cost of sales 18,886,687 15,959,912 Gross profit 11,316,423 8,654,446 37.5% 35.2% Costs and expenses Marketing 1,812,706 1,768,079 Research and development 2,138,185 2,034,641 General and administrative 2,768,226 2,492,310 Total operating expenses 6,719,117 6,295,030 Operating income 4,597,306 2,359,416 15.2% 9.6% Other income (expense) Other income, primarily interest 896,606 587,744 Interest expense (6,143) (6,143) Total other income (expense) 890,463 581,601 Income before income taxes 5,487,769 2,941,017 Income taxes 1,527,000 687,000 Net income $3,960,769 $2,254,017 13.1% 9.2% Basic net income per share $0.23 $0.13 Diluted net income per share $0.22 $0.13 Shares used in computing net income per share: Basic 17,492,157 17,402,270 Diluted 17,975,795 17,936,051 Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Stock Based W/O Stock Based Compensation Compensation GAAP Results Expense Expense Sept. 30, 2006 Sept. 30, 2006 Sept. 30, 2006 Net sales $30,203,110 $ - $30,203,110 Cost of sales 18,886,687 277,043 18,609,644 Gross profit 11,316,423 277,043 11,593,466 37.5% 38.4% Operating expenses: Marketing 1,812,706 55,906 1,756,800 Research and development 2,138,185 68,671 2,069,514 General and administrative 2,768,226 428,046 2,340,180 Total operating expenses 6,719,117 552,623 6,166,494 Operating income 4,597,306 829,666 5,426,972 15.2% 18.0% Other income (expense): Other, primarily interest income 896,606 - 896,606 Interest expense (6,143) - (6,143) Total other income, net 890,463 - 890,463 Income before income taxes 5,487,769 829,666 6,317,435 Income taxes 1,527,000 (149,000) 1,676,000 Net Income $3,960,769 $ 680,666 $4,641,435 13.1% 15.4% Basic net income per share $0.23 $0.04 $0.27 Diluted net income per share $0.22 $0.04 $0.26 Shares used in computing net income per share: Basic 17,492,157 17,492,157 17,492,157 Diluted 17,975,795 17,975,795 17,975,795 Anaren, Inc. and Subsidiaries Consolidated Condensed Statements of Income (Unaudited) Three Months Ended Without Stock Based Stock Based Compensation Compensation GAAP Results Expense Expense Sept. 30, 2005 Sept. 30, 2005 Sept. 30, 2005 Net sales $24,614,358 $ - $24,614,358 Cost of sales 15,959,912 351,928 15,607,984 Gross profit 8,654,446 351,928 9,006,374 35.2% 36.6% Operating expenses: Marketing 1,768,079 68,452 1,699,627 Research and development 2,034,641 - 2,034,641 General and administrative 2,492,310 441,541 2,050,769 Total operating expenses 6,295,030 509,993 5,785,037 Operating income 2,359,416 861,921 3,221,337 9.6% 13.1% Other income (expense): Other, primarily interest income 587,744 - 587,744 Interest expense (6,143) - (6,143) Total other income, net 581,601 - 581,601 Income before income taxes 2,941,017 861,921 3,802,938 Income taxes 687,000 (67,000) 754,000 Net Income $2,254,017 $794,921 $3,048,938 9.2% 12.4% Basic net income per share $0.13 $0.04 $0.17 Diluted net income per share $0.13 $0.04 $0.17 Shares used in computing net income per share: Basic 17,402,270 17,402,270 17,402,270 Diluted 17,936,051 17,936,051 17,936,051 Anaren, Inc. Consolidated Condensed Balance Sheets (Unaudited) Sept. 30, 2006 June 30, 2006 Assets: Cash, cash equivalents and short-term investments $ 71,374,982 $ 82,492,947 Accounts receivable, net 20,030,729 16,362,011 Other receivables 996,000 1,176,009 Inventories 25,458,126 22,132,680 Other current assets 3,207,951 2,312,471 Total current assets 121,067,788 124,476,118 Net property, plant and equipment 28,525,335 27,635,161 Securities held to maturity 15,410,769 6,131,425 Goodwill 30,715,861 30,715,861 Other intangibles 260,153 340,371 Other assets 374,350 32,902 Total assets $196,354,256 $189,331,838 Liabilities and stockholders' equity Liabilities: Accounts payable $ 7,476,965 $ 6,798,793 Accrued expenses 1,841,653 3,254,816 Customer advance payments 483,722 483,722 Other liabilities 2,451,075 1,446,011 Total current liabilities 12,253,415 11,983,342 Other non-current liabilities 5,225,729 4,897,687 Total liabilities 17,479,144 16,881,029 Stockholders' equity: Retained earnings 74,787,031 70,826,262 Common stock and additional paid-in capital 184,524,920 182,049,235 Accumulated comprehensive loss (453,548) (441,397) Less cost of treasury stock (79,983,291) (79,983,291) Total stockholders' equity 178,875,112 172,450,809 Total liabilities and stockholders' equity $196,354,256 $189,331,838 ANAREN, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited) Three Months Ended Sept. 30, 2006 Sept. 30, 2005 Cash flows from operating activities: Net income $3,960,769 $ 2,254,017 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of plant and equipment 1,323,094 1,201,919 (Gain) on sale of land (77,508) - Amortization of intangibles 80,218 83,218 Provision for doubtful accounts 1,279 - Deferred income taxes 145,000 72,000 Stock based compensation 827,808 861,921 Receivables (3,669,997) 14,040 Inventories (3,325,446) (1,385,255) Accounts payable 678,172 470,944 Other assets and liabilities (940,528) (429,951) Net cash provided by (used in) operating activities (997,139) 3,142,853 Cash flows from investing activities: Capital expenditures (2,270,268) (847,902) Increase in other assets (341,448) - Proceeds from sale of land 134,508 - Net maturities (purchases) of marketable debt and equity securities (861,344) 3,532,408 Net cash provided by (used in) investing activities (3,338,552) 2,684,506 Cash flows from financing activities: Stock options exercised 1,225,797 147,836 Tax benefit from exercise of stock options 422,080 - Purchase of treasury stock - (4,894,151) Net cash provided by (used in) financing activities 1,647,877 (4,746,315) Effect of exchange rates (12,151) 63,689 Net increase (decrease) in cash and cash equivalents (2,699,965) 1,144,733 Cash and cash equivalents at beginning of period 15,733,214 5,900,841 Cash and cash equivalents at end of period $13,033,249 $7,045,574 http://www.newscom.com/cgi-bin/prnh/20021022/NYTU197LOGO http://photoarchive.ap.org/ DATASOURCE: Anaren, Inc. CONTACT: Joseph E. Porcello, VP of Finance, +1-315-432-8909 Web site: http://www.anaren.com/

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